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GAIL (India) Ltd has sold some of its liquefied natural gas (LNG) from the US portfolio to European energy major Royal Dutch Shell ahead of production from early 2018, its head BC Tripathi said on Wednesday.

GAIL has a deal to buy 3.5 million tonnes per annum (mtpa) of LNG for 20 years from US-based Cheniere Energy and has also booked capacity for another 2.3 mtpa at Dominion Energy's Cove Point liquefaction plant.

Tripathi refused to elaborate on the volumes, pricing and duration of the deal with Shell but a trade source said GAIL has sold at least 0.5 mtpa LNG to Shell.

GAIL would also issue an LNG swap tender in two months to cut transport costs for supplies to India, he said, adding 0.5 million tonnes of its US LNG has already been booked by local clients while talks were ongoing with domestic and foreign firms for more such deals.

GAIL was keen to swap about 2 mtpa of its LNG, Tripathi had said in January 2014.

India's gas demand is set to rise as the federal government has approved policies to boost power and fertiliser production using imported gas.

Gas demand in the world's second most populous nation however declined in the quarter ending in April as alternative fuel like furnace oil turned cheaper due to rout in global oil markets.

Also prices of gas sourced under a long-term deal with Qatar have turned costly tapering the demand for the cleaner fuel.

He said India has used a 10 percent reduction permissible under a 25-year contract with Qatar's RasGas to import up to 7.5 mtpa the super cooled fuel.

This is the first time India has exercised its right to lift less volumes since the start of contract in 2004. GAIL has rights to sell about 60 percent of the gas volumes sourced under the long-term deal with Qatar.

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About Us

"Power Advisor" is a one of its kind initiative in the Indian Power Sector to offer "Quick & Detailed Answers" to the most common questions related to the Indian Power Market. Wherever needed we also provide all the necessary support in analyzing the specific details of the problem from all possible dimensions.